Thursday, 30 November 2017

The European Citizens’ Initiative & Greek debt: An unlikely combination

Anastasia Karatzia, Lecturer in Law, University of Essex

Introduction

It is not every day that we see CJEU judgments on the
European and Monetary Union (EMU). A simple search on Curia with the words
‘Economic and Monetary Policy’ results in relatively few cases including a
couple of seminal judgments published in the past five years, such as Pringle
and Gauweiler(discussed here),
which relate to measures taken for the management of the Eurozone crisis. One
of the results of this search is the case of Anagnostakis
v Commission, which challenges the refusal of the Commission to register
Mr. Anagnostakis’ proposed European Citizens’ Initiative (ECI) ‘One million
signatures for solidarity’.

Mr. Anagnostakis submitted his proposed Initiative to the Commission
in July 2012. According to the text of the proposal, the objective of the
Initiative was the establishment, in EU law, of a principle of ‘the state of
necessity, in accordance with which, when the financial and political existence
of a Member State is threatened by the servicing of abhorrent debt, the refusal
to repay that debt is necessary and justifiable.’ The proposed ECI mentioned
Articles 119 - 144 TFEU (the Treaty provisions on EMU) as the legal basis for
its adoption. In September 2012, the Commission refused to register Mr.
Anagnostakis’ proposal on the ground that the proposal did not fulfil the
conditions of Article 4(2)(b) of the ECI
Regulation, as it ‘fell manifestly outside the scope of the Commission’s
powers to submit a proposal for the adoption of a legal act of the Union for
the purpose of implementing the Treaty’.

The letter of refusal sent to the organiser stated that the
Commission had examined the Treaty provisions referred to in the proposed ECI,
in particular Article 136(1) TFEU ‘and all other possible legal bases’, before
concluding that the proposed Initiative should be refused registration. On 11
October 2012, Mr. Anagnostakis challenged the refusal of his Initiative,
claiming that the Commission could have registered the ECI on the basis of
Article 122(1), Article 122(2), Article 136(1)(b) TFEU, and rules of
international law. The General Court found
that the Commission had not committed an error in law by refusing to register
the proposal and thus dismissed the case. It also ruled that the Commission had
complied with its obligation to state reasons, after examining this procedural
ground on its own motion.

The applicant appealed the judgment of the General Court, and
the European Court of Justice (ECJ) delivered its judgment on 12 September
2017. This commentary, which is the third in a line of posts in ‘EU Law
Analysis’ on ECI-cases (see earlier comments on the TTIP/CETA
and Minority
Safepack cases), will focus on the ECJ’s judgment, which is the first
and currently the only ECJ judgment relating to an ECI. Interestingly, the
judgment was delivered by the Grand Chamber, possibly because of the novel
nature of the subject matter, or (/and) because of the politically sensitive
nature of the Initiative.

In addition to this first ECI judgment, the Commission’s
Proposal for a new ECI Regulation, was recently published and was presented
earlier this week (28 November) by the First Vice President Timmermans to the
European Parliament. The commentary will conclude by briefly looking at a
specific aspect of the Commission’s Proposal, namely the suggested
formalisation of the partial registration of an ECI.

The judgment of the
European Court of Justice in Anagnostakis

The appeal consisted of four grounds which were classified
into two groups (as suggested by the Advocate-General’s opinion).
The first group of arguments concerned the procedure in which the Commission
made its Decision. The appellant challenged the finding of the General Court
that the contested decision satisfied the Commission’s requirement to give
reasons under Article 296 TFEU. The second group concerned the substance of the
Decision: the appellant complained that the General Court misinterpreted
Article 122 TFEU, Article 136(1) TFEU, and rules of international law in
finding that the Commission’s assessment of Article 4(2)(b) of the ECI
Regulation was correct.

The Commission’s
obligation to give reasons

According to the appellant, the General Court’s assessment of
the Commission’s duty to state reasons was faulty. The General Court wrongly
held that the Commission’s mere reference to Article 4(2)(b) of the ECI
Regulation in its Communication was a sufficient reason for the refusal of the
proposed ECI. Simply stating that an ECI proposal was refused on the basis of
Article 4(2)(b) of the ECI Regulation did not actually explain why the
Commission manifestly lacked the competence to register the proposal.

The ECJ’s assessment of this ground of review is clear and
consistent with the case law on Article 296 TFEU, specifically expressed in the
context of the ECI in Article 4(3) of the ECI Regulation. The Court started by
referring to Article 11(4) TEU (i.e. the legal basis of the ECI together with
Article 24 TFEU), characterising the ECI as one of the instruments related to
‘the right of citizens to participate in the democratic life of the Union,’
(para 24) stipulated in Article 10(3) TFEU. The Court referred to well-established
case law on Article 296 TFEU, according to which an EU institution’s statement
of reasons must be assessed by reference to the circumstances of the specific
case, taking into consideration the wording of the statement as well as the
context and all the legal rules governing the matter in question (para 29). It stressed
that the purpose of the duty to give reasons is to enable the person concerned
to understand why the decision was taken, and to enable the competent Court to
exercise its powers of review.

The Court then went on to consider the General Court’s
finding that the Commission had complied with its obligation to state reasons
(paras 31-43).The main message of the Court here was that a more detailed
statement of reasons by the Commission would only be required if the ECI
proposal itself was more detailed. The brevity of the proposed ECI, as well as
the general reference made to Articles 119-144 TFEU and the lack of an
explanation of the link between those Articles and the content of the proposal,
justified the brevity of the contested Decision.

In light of the format of the proposed Initiative, the
Commission was entitled to assess the proposal predominantly on the basis of
Article 136(1) TFEU (a general power to adopt legislation relating to EMU),
which was the least irrelevant Article on which the proposed ECI could have
relied. Moreover, there is no obligation on the Commission to justify its
assessment of all 26 proposed legal bases or to explain why any other provision
of the TFEU was irrelevant. In its assessment, the Court took into account the
fact that the General Court was eventually able to review the substance of the Commission’s
decision, which, as mentioned above, is one of the underlying objectives of
imposing on the EU Institutions a duty to give reasons in the first place (para
40).

In line with the General Court ruling in Minority
Safepack, the ECJ in Anagnostakis
supported the view that that the Commission would have to publish a more
detailed statement of reasons only if the organisers had given more detailed
information on the connection between the recommended legal bases and the
content of the proposed ECI (para 37). Future ECI organisers should therefore
be mindful of the fact that the format of a proposed ECI itself – including the
details in the text of the proposal and the Annexes attached to it – is a
determining factor of the extent of the Commission’s obligation to give reasons
for rejecting a proposed Initiative. This approach might refuel concerns regarding
the ability of grassroots organisers to put together detailed explanations of
the suitable legal bases for their proposals, not least when these proposals
have to do with matters that are as complicated as the EMU.

On the substance of the
case

With regard to the substance of the case, the appellant
argued that the Commission should have registered the proposed Initiative on
the basis of Articles 122, 136(1) TFEU, and rules of international law. The
latter argument, which was examined last, was the one most swiftly rejected by
the Court: a principle of international law cannot be a legal basis for an
initiative by the Commission. According to Article 5(1) and 5(2) TEU, the
Commission can only act within the limits of the competences conferred upon it
by the Treaties, and the existence of a principle of international law ‘would
not suffice as a basis for a legislative initiative’ (see paras 95-103).

Interestingly, before delving into the substance of the
matter, the Court considered the scope of judicial review that it could carry
out in the case at hand. It clarified that a review of the merits of the
General Court’s decision can only be made on the basis of the information
provided at the time of the request for the Initiative’s registration. As such,
the Court would not take into account any clarifications made by the appellant
in the appeal at hand. After this preliminary observation, the ECJ examined the
appellant’s arguments concerning Articles 122 and 136(1) TFEU.

The Court first examined whether Article 122 TFEU could have
been an appropriate legal basis for the proposed ECI. It reiterated that
Article 122(1) TFEU allows the Council to decide, ‘in a spirit of solidarity
between Member States’, upon measures appropriate to the economic situation,
especially if the Member State is facing severe difficulties in the supply of
certain products in the area of energy. It confirmed the finding of the General
Court in first instance, which had cited Pringle,
that Article 122(1) TFEU ‘does not constitute an appropriate legal basis for
possible financial assistance from the Union to Member States who are
experiencing, or are threatened by severe financing issues’ (para 69).
According to the Court, it did not matter that Pringle concerned the European Stability Mechanism, which was not
the focus of the proposed ECI; the point remained that Article 122(1) TFEU does
not apply to measures aiming to ease a Member State of its financial
difficulties (para 70).

Subsequently, the ECJ also dismissed the appellant’s argument
that, contrary to the General Court’s decision, Article 122(2) TFEU could be an
appropriate legal basis for the ECI. The provision allows the Council to
authorise financial assistance from the EU to a Member State which is
experiencing severe difficulties or a serious threat of severe difficulties
caused by natural disasters or exceptional circumstances beyond its control.
Once again, the ECJ referred to the case of Pringle
where it had ruled that Article 122(2) TFEU cannot be used as the basis for the
establishment of a general and permanent mechanism of non-repayment of debt
(para 75). Since the ECI proposal suggested the deletion of debts owed by the
Member States to both the EU and to public and private, natural or legal
persons, it could not fall within the meaning of Article 122(2) TFEU, which
concerns only financial assistance provided by the EU and not by the other
involved persons (paras 76 and 77).

Finally, the ECJ confirmed the finding of the General Court
that Article 136(1) TFEU cannot be used as a legal basis for the establishment
of the principle of the state of necessity in EU law. According to the Court,
the adoption of a measure such as the one suggested by the proposed Initiative
cannot be seen as ‘economic policy guidance’ as envisaged by Article 136(1)(b)
TFEU. To the contrary, the mechanism proposed by the ECI would replace the free
will of contracting parties by allowing for the unilateral writing-off of
sovereign debt (paras 90-91).

Overall, it is notable that the ECJ dismissed a number of the
applicant’s arguments under each ground of appeal because of the limited scope
of review in the context of the case at hand. On appeal, the ECJ can only
review the findings of law on the case put forward by the parties in the case
before the General Court. As such, a number of the arguments put forward by the
appellant were not assessed on their merits, leaving a number of questions
unanswered by the Court in this occasion. The first question is whether a
Member State facing severe financing difficulties can invoke the so-called ‘state
of necessity’ to receive debt relief not unilaterally, but subject to
conditionality laid down by the Commission (paras 71-73). The second question
is whether the Initiative could be adopted on the basis of Article 136(3) TFEU
in conjunction with Article 352 TFEU (the ‘residual powers’ clause). Besides the
procedural point concerning the inability of the ECJ to rule on the above two
questions on appeal, one might also wonder whether the ECI-case of Anagnostakis would have been an
appropriate occasion for the ECJ to make any bold declarations on the issue of
a Member State’s debt relief.

The third question left open was whether the Commission
should have partially registered the proposed Initiative only to the extent
that the proposal suggested the relief of the debt owed by a Member State to
the Union. The ECJ did not examine whether the Commission should have
registered this interpretation of the proposal. As a more general observation, we
should note that the procedural question of whether partial registration by the
Commission is possible has now become redundant. Earlier this year, the
Commission partially registered the Minority
SafePack ECI while, as we will see below, the Commission’s Proposal for a
New ECI Regulation specifically refers to the possibility for the Commission to
allow partial registration of a proposed Initiative.

Partial Registration of
an ECI under the Commission’s Proposal for a New ECI Regulation

Five days after the ECJ’s decision in Anagnostakis, the Commission published its ‘Proposal
for a Regulation of the European Parliament and of the Council on the European
Citizens’ Initiative’, which suggests the adoption of a New ECI Regulation
to replace Regulation 211/2011. In the proposed ‘New ECI Regulation’, the legal
admissibility test has been moved from Article 4 to Article 6. The newly
suggested provision retains the essence of the current procedure: organisers
may only start collecting signatures supporting their ECI after they have
submitted their request through the register (Article 6(2)), and the Commission
has checked that the proposal satisfies certain legal and procedural criteria
(Article 6(3) and (4)) and has registered the proposal (Article 6(1)).

Under the New ECI Regulation, Articles 6(3)(d) and (e)
maintain the two legal criteria of the current ECI Regulation: a proposed
Initiative will not be registered if it is manifestly abusive, frivolous or
vexatious, or if it is manifestly contrary to the values of the EU (see Article
4(2)(c) and (d) of the current ECI Regulation). Perhaps the most notable changes
are included in Articles 6(3)(c) and Article 6(4) of the New ECI Regulation
compared with the current Article 4(2)(b) of the ECI Regulation. Article 6(3)(c)
states that the Commission shall register a proposed initiative if ‘none of the
parts of the initiative manifestly falls outside the framework of the
Commission’s powers to submit a proposal for a legal act of the Union for the
purpose of implementing the Treaties’. This Article should be read in
conjunction with Article 6(4), which allows for the partial registration of an
ECI by the Commission.

To put it simply (or, at least, as simply as possible), if
the Commission considers that only parts of a proposal fall within its
competence to propose a legal act, it has to send the proposal back to the
organisers within one month, together with the reasons behind its assessment.
The organisers then have the possibility – and the responsibility – to change
and resubmit, to maintain, or to withdraw their initial proposal. It is not
very clear why organisers might want to maintain a rejected proposal, which in
all likelihood will simply be rejected again by the Commission. In case the
organisers decide to change their proposal, however, they would have the
responsibility of submitting the necessary amendments to the Commission. After
receiving the amendments, the Commission would have one month to assess the new
information and to either register, partially register, or reject the ECI
(Article 6(4)).

Partial registration of an ECI would thus be formalised in
the sense that the Commission would have to check if ‘a substantial part of the
initiative including its main objectives’ does not manifestly fall outside the
framework of the Commission’s powers to submit a proposal for a legal act. The
proposed Regulation does not define what is to be considered ‘a substantial
part’ of a proposed Initiative. Not only that, but the proposal shifts the
burden on the organisers to re-consider their initiative and re-submit to the
Commission, instead of obliging the Commission to specify which parts of the
initial ECI proposal it can maintain for the purposes of registration. It will
be interesting to see how the European Parliament will react to this, and the
rest of the changes to the ECI legal framework proposed by the Commission in
the New ECI Regulation, especially since MEPs have been advocating for a more
user-friendly ECI in their contributions to the review
of the current ECI Regulation.